This blog is used to post legal tips for businesses and consumers in California as well as commentaries on issues of interest to clients in the San Diego area. For information about our services, please contact us at (619) 448-2129. This publication is NOT INTENDED TO SERVE AS A SUBSTITUTE FOR LEGAL ADVICE. Please consult with a licensed attorney if you require legal advice. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Saturday, October 16, 2010

When I first opened my practice in 2004, I knew that I needed a website to promote my services. I had heard of blogging and figured that I needed one for my website. So I started off with Yahoo's over priced web hosting service and a blog powered by Google's Blogger.com.

A lot has changed since 2004. I no longer work alone at a desk in the plan room of my father's construction company. I've got a real office and my wife works with me as a top notch bankruptcy paralegal. My practice has grown up and I've outgrown Blogger.com.

After more than 300 blog posts, this will be my last blog entry via Blogger.com. The blog and the entire website both have a fresh new look courtesy of WordPress and a Headway theme. It has been a good run, but it is time to say goodbye to Blogger and hello to WordPress. Please click here to start reading the new blog.

Thursday, September 30, 2010

This is a letter that I actually started to write as a result of the blackout from the home opener. I decided to finish it learning about another blackout due to the failure to sell enough tickets to the second home game.

I am a San Diego bankruptcy attorney and I help clients everyday with a variety of difficult financial circumstances. Many of my clients are victims of the economy and perhaps have suffered a job loss. Other clients made bad decisions such as a mortgage they could not afford or purchased too much on their credit regardless. I try to teach them to live within their means and try to apply those lessons in my own life. What this means is that I will rarely pay to see a game in person due to the high cost of tickets, parking, food, souvenirs and Lord knows what else. However, the blackouts of the first 2 home games is causing me to wonder if I will even watch another Charger game the rest of the year.

The NFL has a well known rule about keeping home games off local TV if the team doesn't sell all the tickets at least 72 hours before start time for the game. According an article by Tim Sullivan of the Union-Tribune, the cost to the Chargers to lift the blackout of the first home game would have been no more than $221,380.80. I did an little research and confirmed that NFL teams can lift the blackout if they pay the visiting team its share of the revenue for the unsold tickets. The visiting teams share is 34% of the face value of the ticket.

Although it would seem this cost (tax deductible to the Chargers) would have been offset by revenue generated from having the game on TV, the Chargers are apparently more interested in stubbornly holding onto the idea of more fans in the seats. With unemployment at more than 10% in San Diego, this is not about a city with a reputation for having “fair weather” fans, this is about the Chargers turning their backs on the fan base that will support their team even if they cannot afford to go to the game.

The blackouts also hurt local businesses that rely on game day revenue when the Charger games are not on TV. The Chargers do not seem to realize nor care about this. I find the Chargers actions to be short sighted and insensitive to the fans and their economic hardships. I find it hard to support a team whose management team seems to be out of touch with the fans on issues like this.

I am trying hard to find a good reason to watch a Charger game the rest of the season. It sure would be nice to hear from the organization about this.

Sunday, September 12, 2010

Not too long ago, I started an advertising campaign on a local radio station. I excitedly tuned into the station and listened for my first "spot" to run. The station's staff had not entered the proper "conflict codes", so they also ran an advertisement for a debt settlement company right after mine. The debt settlement company made lots of empty promises and it inspired me to write this article. Here are 5 reasons why I believe that chapter 13 bankruptcy is a better option for people who wish to repay some of their debts than hiring a debt settlement company that tries to settle doubts outside of bankruptcy:

Debt forgiveness received from bankruptcy is not taxable. If you settle a debt for less than what you owe, the creditor must send you an IRS 1099 form if the amount forgiven is greater than $600. If you pay $2000 to settle a $4000 debt, you might have taxable income of $2000. Debts that are forgiven in bankruptcy are never taxable.

Chapter 13 Bankruptcy lets you deal with all of your creditors in one proceeding. A confirmed Chapter 13 repayment plan is binding on all of your creditors, even creditors such as the IRS or your care lender. Debt settlement companies, however, typically only work with unsecured creditors such as creditor card companies and they won’t assist you with tax debts. Some creditors like American Express will only work with the borrower and not a debt settlement company. The automatic stay created by the filing of a bankruptcy prohibits any of your creditors from suing you.

Chapter 13 bankruptcy gives you more control than debt settlement. In Chapter 13, you submit a payment proposal to the court based on your ability to pay. If you can convince the Chapter 13 trustee and the judge that your plan complies with the law and is proposed in good faith, you don't have to worry about negotiating with multiple creditors.

You can modify some car loans in Chapter 13. If you purchase a car and the original loan is more than 910 days old, a Chapter 13 bankruptcy could help you force the lender to modify the loan. A number of my clients have used Chapter 13 to reduce the balance of their care loan and reduce the interest to as little as 4.25%.

Some debtors can use Chapter 13 to get rid of a second mortgage. If a debtor's home is worth less than the balance owed on a first mortgage, a homeowner that qualifies for Chapter 13 can get a court order stripping the second mortgage from their home. I recently helped a couple remove a $116,000 second mortgage from their home. Debt settlement cannot promise that.

Debt settlement companies often play on a debtor’s feelings of guilt about their debts or promote myths about how bankruptcy can harm a debtor's credit rating while ignoring the harm caused by debt settlement. I have yet to see a satisfied debt settlement customer come through my doors and Chapter 13 gives the debtor the opportunity to provide a court ordered plan to get their financial affairs back in order.

If you are in financial difficulty and are in Southern California, a free a consultation is just a phone call away. Please call me today at (619) 448-2129 to explore you options for a fresh start with bankruptcy.

Saturday, August 21, 2010

In tough economic times, the offer of a quick fix or a miracle cure can often be too much to resist when a desperate homeowner is trying to catch up on past due mortgage payments. With loan modification scams on the rise, a number of states have passed laws designed to protect consumers from predators offering fraudulent loan modification services. The following tips can help consumers avoided getting scammed:

Avoid any loan modification company that demands advance fees. With limited exceptions, California has banned any type of advance fee to work with your lender to modify, refinance or reinstate your mortgage. The obvious risk is that they may pocket your money and do nothing to save your home from foreclosure.

Over the top guarantees. No matter how much experience someone claims to have, nobody can truly guarantee that they can stop foreclosure or modify a loan. The only thing they can really promise is that they will do their best to help you.

The company advises you to stop paying your mortgage. People who are behind on their mortgages are often having other bill problems and they can be tempted to spend the mortgage payment on other perceived needs. When the lender wants a good faith payment during negotiations, the money is gone. Do not make your payments to the loan modification provider under an circumstances.

The company asks you to sign over your house or sign paperwork that you haven't read. A legitimate housing counselor would always give you time to review the document and understand it.

A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.

If you cannot afford an attorney to assist you with a loan modification, there are a number of free or low cost resources available to you:

U.S. Government Program to Refinance or Modify Loans:
To find out if you qualify, and how much your loan might be reduced, Click Here .

We do not offer loan modification services. However we do help debtors file for Chapter 13 bankruptcy to get caught up on their mortgage payments and use bankruptcy to help remove second mortgages under certain circumstances. If you live in the San Diego area, are suffering financial difficulties and have exhausted your loan modification options, please call us at (619) 448-2129 to see if bankruptcy can help you.

Sunday, July 25, 2010

In a recent blog entry, I discussed the misleading concept that some debtors think of themselves as "judgment proof". However a recent question from a client about insolvency as an "alternative" to bankruptcy indicated that another article on the topic might be warranted.

There are two types of insolvency: (1) cash flow insolvency, where you cannot pay your debts as they come due; and (2) balance sheet insolvency, where the debts exceed the value of your assets. Insolvency might make a bill collector's job more difficult, it is NOT as a legal defense to the nonpayment of debts and cannot protect you from a lawsuit for unpaid bills.

You cannot be "declared" insolvent nor can you "claim" insolvency except perhaps when dealing with debt forgiveness income on your tax return. If a debtor settles a creditor card debt for less than the full amount owed, they will send out a 1099 to the debtor and the IRS. If the debtor meets the definition in the Internal Revenue Code for insolvency, the debt forgiveness might not be counted as taxable income. However, the creditor is free to file a lawsuit and get a judgment to garnish the debtor's wages.

Insolvency by itself is not an alternative to bankruptcy. It is a bit like trying to hide assets or doing nothing in the hope that creditors won't find anything. It is also like running and hiding from a bully. Sometimes you need to confront the bully.

If you are in Southern California and are tired of running from your creditors and the harassing phone calls, please call me today and (619) 448-2129 for a free consultation.

Thursday, July 15, 2010

Fans of the show "Real Housewives of New Jersey", may know that Teresa Giudice and her husband filed for Chapter 7 bankruptcy. What they may not know is that the trustee assigned to the case has filed a lawsuit asking the bankruptcy court to prohibit them from getting a discharge. The lawsuit, called an adversary proceeding, accuses them of hiding assets from the court and the trustee. The hidden assets are said to include a pizza parlor, laundromat, Teresa’s TG Fabulicious clothing line and the “Skinny Italian” cookbook.

The original bankruptcy petition filed by the Giudices did not even list bank accounts. Even with at least 2 subsequent amendments, many of the Giudices assets seen on the show were apparently left out. The trustee seems to have taken notice of these omissions.

Section 727 of the Bankruptcy Code allows the court to deny a discharge if debtors lie under oath or try to conceal assets. Committing perjury in a bankruptcy case is a federal crime that could bring fines of up to $250,000 and/or a jail sentence up to 5 years. To add further insult to injury, the debtors will still lose their assets. The Giudices will soon be losing many of their home furnishings, tools and a boat.

An attorney can only provide proper advice with full disclosure from the client. Lying to the trustee and the court simply is not worth the risk of losing your discharge or going to jail. If you are in Southern California and need advice about properly protecting your assets in bankruptcy, please me today at (619) 448-2129 for a free consultation.

Saturday, July 10, 2010

I sometimes hear from debtors that do not wish to file bankruptcy because they believe that they are “judgment proof”. Being “judgment proof” generally means that the debtor has no substantial assets that a judgment creditor could use to satisfy a judgment. However, the lack of ability to pay a judgment is not a legal defense to a lawsuit and a creditor can still sue for any unpaid debts. This reality makes the term “judgment proof” misleading.

Just because a debtor does not currently have assets does not necessarily mean that getting a judgment is a waste of time. A creditor could use a wage garnishment to collect as much as 25% of the debtor's take home pay. The debtor's financial situation could also change in the future. Judgment creditors will sometimes wait to see if the debtor inherits property, receives a tax refund or even wins the lottery. Once the judgment is recorded, it will show up automatically on the debtor’s credit report too.

Lawsuits can be scary. Bankruptcy can stop creditor harassment immediately so you don’t have wonder if the county sheriff will show up at your job to serve your employer with a wage garnishment. If you are in Southern California and involved in a debt collection lawsuit, call me today at (619) 448-2129 for a free consultation.

Sunday, June 06, 2010

One of the hardest things that my potential bankruptcy clients face from an emotional standpoint is losing property they have acquired over the years. In recent months, I have noticed that some of my clients have an odd attachment to their timeshares.

The reality is that timeshares are a lousy investment. If you don't believe me, just check the prices of timeshares available on eBay. A few years ago, I attended a timeshare presentation in Las Vegas for a development that was being heavily promoted in the Southern California market called Tahiti Village. The unit that the developer offered me for $55,000 is now available on eBay for $297...and there are no bids at that price at the time I wrote this article. I have als personally purchased 2 timeshares on eBay...for $1 each.

Timeshares can be a decent vacation value if you don't pay an outrageous price to buy one. If I pay $800 a year for the week that I own in Kuaui, that is about $115 per night at a very nice resort and that seems be hard to beat for a decent hotel in Hawaii. However, it is only a value because I own the unit free and clear. I don't have to worry about a monthly payment to a lender for an overpriced unit.

I have seen clients that owe $12,000 or more on a timeshare. They are usually better off letter the unit go back to the developer or the HOA and buying a much cheaper timeshare after their bankruptcy or even renting a timeshare from a website such as Redweek.com.If you are in Southern California and would like a free consultation regarding you debt problems or want information on how to get rid of your timeshare, please call me now at (619) 448-2129.

Sunday, March 21, 2010

My wife challenged me to come up with a list 3 things that I have learned from my profession that everyone should know. Although bankruptcy is my primary area of practice, I have been fortunate in my career to have had broad exposure to many areas of law. I have the advantage of learning from my own mistakes as well as the mistakes of others and getting paid to help others fix those mistakes.
But if I had the opportunity to share 3 things with someone about my profession and only those 3 things, here is what I would tell them:

Estate Planning. At a bare minimum, everybody should at least have a will, a power of attorney for health care and a financial power of attorney. Some people need advanced estate planning like a living trust to avoid unnecessary taxes. But estate planning is more than trusts and wills. Does your family know your burial wishes? Who will handle your financial and medical decisions when you cannot? Who would get custody of your children? Why would you even burden your family with these decisions when you can decide those issues now?

Proper Budgeting and Financial Planning. In my experience, most of my clients really have no idea how much money they actually spend on even the most basic of necessities such as food and clothing. If you can become the master of what you spend, then you can plan properly to save for retirement, vacation and unexpected surprises.

Having the Proper Insurance. You can rarely go wrong with having more insurance. You should have life insurance to provide for your family if you are suddenly gone. You should have health insurance to prevent catastrophic medicals bills. You should have homeowner’s or renter’s insurance to protect your belongings as well as car insurance that does more than meet the statutory minimum policies set forth in the law. I once handled a case where a young driver caused an accident which caused the victim to have $250,000 in medical bills and he only had $15,000 in coverage. That month, I increased my own liability coverage by 500% and added a $1 million umbrella policy. The total bill for this additional coverage was only an extra $50 per month.

Perhaps the best piece of advice I can give it regarding your legal needs is that you should try not to do it alone. A piece of software cannot replace personal service or years of experience that a licensed professional offers. Trying to handle your own legal matters without assistance is a bit like trying to perform surgery on yourself without the help of a doctor. Things can go very badly if you make a mistake and there usually is not a second chance to correct it.
If you are in Southern California and are experiencing debt problems or need guidance in a legal issue, please call me at (619) 448-2129.

Sunday, March 07, 2010

As a bankruptcy attorney, I find that one of biggest concerns that debtors have is about their assets: "Can I keep my house?" "Can I keep my car?". In most cases, I can give my clients a clear idea of what property they can keep and what they may need to sacrifice in a bankruptcy proceeding. However, a more difficult question is whether the debtor should keep the property.

Although it is widely believed that home ownership is more beneficial than renting, this is not always true. The debtor must ultimately look at both the financial and the emotional factors to decide if a home is worth keeping.

On the financial side, home ownership usually is more financially beneficial then renting. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. However, the financial benefits start to disappear if the debtor owes more than the house is worth. Renters also do not pay property taxes or home maintenance, but they do have the risk of higher rent payments at the end of their lease.

Even with a house that is upside down, there are emotional considerations that go beyond the savings a renter might realize: (1) pride of ownership; (2) stability; and (3) quality of life. A family with young children that has lived in the same neighborhood for 10 years may have more of an emotional attachment to the home than a couple whose children have all grown and moved out or a family with children too young to have memories of the house.

If you are considering bankruptcy, you need to look at all of the financial and emotional factors together. Owning a home can be a rewarding experience but it can also be a financial millstone that is keeping you from getting a fresh start.

If you are in Southern California and are struggling with home ownership and heavy debt burdens, call me today (619) 448-2129 for a free consultation and a caring voice.

If you are in Southern California and are struggling with home ownership and heavy burdens, call me today (619) 448-2129 for a free consultation and a caring voice.

Saturday, February 13, 2010

If you are ever planning a trip to Anaheim or a visit to Disneyland and are considering the ExtendedStayAmerica hotel, do yourself a favor and find another place to stay. The particular hotel to avoid is located at 1742 S. Clementine Street, Anaheim, CA 92802. The facility is horrible and the service was even worse.

When booking a weekend for my family to visit Disneyland, I tried out Priceline.com to check for decent prices. I booked what was supposed to be a non-smoking, one bedroom suite. When we got to the room, it was a studio with only one bed and smelled horrible. I went right back down to lobby to make arrangements to get checked out and into another hotel. After I got the "you have to get your money back from Priceline" speech from Vern, the front desk clerk, I proceeded to wait on hold with Priceline to get confirmation of the cancellation.

After 45 minutes on hold, I finally got Priceline to refund my money. I had given my debit card to Vern for incidentals, but he absolutely refused to give me a check out receipt or anything else in writing to confirm that I had checked out and did not owe any charges beyond what had already be debited from my checking account by Priceline. According to Vern, the manager was gone for the weekend and he could not help me.

I would suggest to Nina Valencia, the hotel manager, the she needs to give her employees a refresher course in customer service. Refusing to give me written assurances that I would not be charged any more money was absolutely ridiculous. When I called the main corporate number for ExtendedStayAmerica, they were equally perplexed at Vern's refusal to provide the requested information. They also could not help me.

Although I am a big fan of William Shatner and Star Trek, I doubt very much that I will be booking travel with Priceline.com on the near future and ExtendedStayAmerica will never get any business from me.

Tuesday, January 05, 2010

I recently wrote a 2-part series on strategies for California business owners to stay in business while filing for Chapter 7. However, saving a business isn’t always possible. Here are some of the signs that I look for when telling a client that it may be time to close their business.

The professionals say you should close. Many business owners have an emotional attachment to their business and do not wish to be an employee of someone else again or perhaps they are afraid to admit that their business is failed. Some businesses are like men that won’t stop and asked directions: advice from a trusted advisor such as a CPA or attorney that a business is in trouble is not given lightly.

You aren’t making as much money as you thought. An important factor that business owners need to remember is the value of their time. One way to measure how much money a business owner is making would be to calculate the net profit and divide it by the number of hours they work. Many owners may find that they would make more money working as a cashier at the local 7-11.

You are always struggling to pay your quarterly taxes. A common problem for business owners is the inability to make timely payments on their quarterly taxes. A high gross income does not guarantee a profitable business. If you are delaying payment of taxes for cash flow reasons, your business is in trouble.

Things will get better next month. Some business owners insist that they only need a good month to make up for past loses. Counting on increased business without a plan of action to grow revenues is not unlike playing the lottery: anything is possible, but not very likely.

The future for the industry looks bleak. In the past year or so, I have handled a number of bankruptcy cases for people in the printing business. Businesses are advertising less, buying fewer business cards and printing their own letterhead. If a particular industry is shrinking, it may be time to get out.

The business isn’t worth much. Like the illusion of short sales in real estate, some business owners greatly over value their businesses. An experienced business broker can give you a very realistic opinion on the value of the businesses. Declining business values maybe a sign that it is time to get out.

You have no retirement plans. If a business owner is too caught up in the day to day operations of the business to be able to plan for retirement, then a change may be necessary.

If you recognize any of these warning signs, it may be time to schedule a consultation with a bankruptcy attorney and explore your options. If you are in Southern California, call me now at (619) 448-2129 for a free consultation.

Monday, January 04, 2010

"I didn't realize how much stress I was under until I filed with you. I guess I had just gotten used to the feeling. My resolution is to think of need versus want and to save money each month for the unexpected." That is what a client recently told me after receiving a discharge in a Chapter 7 bankruptcy.

Dave Ramsey describes bankruptcy as a "gut-wrenching, life-changing event that causes lifelong damage." He also goes on to claim that bankruptcy "can devastate your job, destroy your marriage and steal your peace of mind." This type of Chicken Little mentality is unwarranted and may scare consumers away from becoming fully informed about all of their debt relief options.

Mr. Ramsey's message resonates particularly well with conservative and evangelical Christians. In my practice, I've come across far to many Christians who feel like they have failed in the eyes of God if they do not repay their debts. I devoted an entire blog entry to the topic to help those clients understand what the Bible really says about bankruptcy.

Mr. Ramsey's negative experience with bankruptcy is atypical. In my entire career, I have not had a single client express regret about filing for bankruptcy. I have seen marriages healed as a result of the stress relief achieved in bankruptcy. I have seen some clients improve their credit scores by as much 150 points because the individual no longer has any debt and their bad payment history will disappear over time.

Mr. Ramsey is correct that bankruptcy is not to be taken lightly. But for many people, it is the only away to get out from under crushing debt loads, lawsuits and creditor harassment. That is not say say that bankruptcy is without consequences. Yes, it will stay on your credit report for 10 years and it is only a temporary fix unless the debtor is willing to make the necessary life changes to avoid future debt problems. But for the vast majority of people who contact me, bankruptcy is truly the only option available.The reality for my practice is that most of the people who come to see me have already done away with the toys and the frivolous spending. I’ve seen too many clients suffering heart problems, insomnia, depression and other stress related health issues by trying to avoid the inevitable for too long.

Sure, you can get a second job if you are $40,000 in the hole and you might have that debt paid off in a few years. But what do you have? You filled a $40,000 hole and several years of time spent at a second job, which means lost evenings with your family and weekends of kids events.

Or you might consider a Chapter 7, which would be over in about 4 months in most cases, learn to live without credit cards and get the fresh start now. For every Dave Ramsey who had a bad experience in bankruptcy, I can point you to dozens of satisfied clients who have benefited greatly from the fresh start provided by a bankruptcy discharge.

Dave Ramsey does offer value assistance in pointing people down a path of financial responsbility and I do not question those services. In fact, debtors who wish to avoid bankruptcy in the future could learn a few things from Mr. Ramsey. However, nobody should decide simply on my word or Mr. Ramsey's word alone. Cut through the hype and scare tactics and explore for yourself what is the best option for you and your family. After all, no decision feels better after you prayer, learn and investigate your options.